The lessons to learn from Uber

Self-employment, worker status and IR35

In a recent landmark ruling, the debate over self-employment and worker status came to ahead again when the supreme court sensationally ruled that Uber drivers are ‘workers’.

The high-profile case was originally brought about by Mr Aslam, an Uber driver who believed that he and other Uber drivers should be receiving employment rights such as minimum wage and holiday pay. Worker status sits between employment and self-employment, entitling individuals to certain benefits they would not otherwise enjoy when engaging as a self-employed contractor.

Throughout the case proceedings, originally brought about in 2016, Uber firmly denied that drivers were ‘workers’, sighting that contracts were made between the drivers and passengers and also claiming that drivers can pick and choose the assignments that they accept and undertake. Their app is nothing more than a platform for self-employed drivers to source and undertake work. The court ultimately did not agree.

The supreme court’s unanimous decision to dismiss Uber’s appeal against an earlier ruling against them was essentially attributed to 5 decisive factors. These factors could well reshape the future of the ‘gig economy’ as we know it.

  1. The contract – The terms in which Uber drivers are engaged are determined by Uber with little to no room for driver input.
  2. Control and penalisation of drivers over accepted or declined work – The court heard that when logged onto the app, drivers are closely monitored in terms of accepted or declined work. Should a driver fail to undertake enough work on the app, they may be penalised and blocked out of the app for a period of time.
  3. Communication restrictions – The court heard that Uber drivers are discouraged and restricted from communicating with or building relationships with passengers directly.
  4. Uber fares – The fare price of each job is exclusively set by Uber, meaning it is Uber that ultimately determines how much a driver will be paid.
  5. Performance expectations – As part of the Uber app, drivers are required to achieve a certain average rating for the services they deliver. Failure to achieve a certain rating could result in warnings and eventual expulsion from using the app.

Uber failed to convince the court that drivers are suitably independent in the way in which they are engaged and were unable to argue against the idea that their business model impresses too much control over the drivers engaging with their app. The fact that Uber holds such control over areas such as earnings and time worked by its drivers ultimately cost them in this case and it sends a clear message to other businesses operating similarly.

There are lessons to learn from this case and with IR35 changes fast approaching, businesses need to adapt and review how they are engaging with their contract workforce. Whilst ‘control’ is only one of several factors considered in an IR35 status assessment, it is extremely important and could be a determining point, as in this case. Clarifying the status of individual contractors and the assignments and projects that they are undertaking has never been so important.

Recruitment Funding Solutions are currently supporting many of its white-collar recruitment agency partners and their client bases to ensure that informed and reasonable IR35 status decisions can be made, and contractors are engaged compliantly ahead of the reforms in April ‘21. For further information or a chat about IR35 and/or our services, contact Alex Grant.